Business Property & Mortgages

Sunday 31 August 2014

5,000 Ulster Bank mortgage holders now out of arrears

Donal O'Donovan

Published 31/03/2014 | 02:30

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The headquarters of Ulster Bank in Dublin. n.
The headquarters of Ulster Bank in Dublin.

ULSTER Bank says it has taken 5,000 customers out of mortgage arrears in the past 12 months.

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The number of its customers three months or more behind on their home loans has fallen every month since March 2013, the bank said in new figures published today.

Those numbers are not being achieved by other lenders, the bank claimed.

One in five of its distressed mortgage cases has been taken out of arrears since the crisis peaked last year, according to Ulster Bank.

Of those, 2,500 had been 90 days or more behind on their payments and about the same number were in shorter-term arrears, the figures show. It means a €1bn fall in the amount of debt not being serviced.

The bank appears to take a swipe at rival AIB's decision to write off mortgage debt for some customers, who get to keep the family home.

"Of course we want to help but offering overly generous solutions which can't be made available broadly can cause issues," Ulster Bank said in a statement outlining the latest figures.

Sources at Ulster Bank say it won't write off debt for people who still get to keep their home because it is costly to the bank, limits new lending, and potentially will led to "unfair" windfalls for homeowners if prices rise in the future.

CONCESSION

An alternative deal for struggling borrowers that is being pushed by the bank is its so-called "economic concession".

Under that deal, the bank will cut mortgage interest to as low as 0.5pc for seven years, making monthly payments cheaper but also allowing customers to pay down their principal debt faster – closing the negative equity gap on the property.

Ulster Banks says its preference is to strike deals allowing people to remain in their home. However, since last September the bank has initiated hundreds of legal actions against customers in arrears that are now coming before the courts.

In today's update, the bank says the legal threats are having the effect of convincing previously uncontactable borrowers to seek a deal.

Since last summer, the share of struggling borrowers who the bank could not contact has dropped to 14pc from 35pc, according to the new numbers.

Arrears numbers are falling as the economy improves and after the bank increased resources dedicated to the issue. As well as 200-strong call centre staff, it has launched a 78-strong "field team" who will go to meet customers at their local branch or at home, if requested, in cases where people don't want to work through the bank call centre.

Typically, customers in arrears are in contact with their lender four times a month – three outbound calls, one inbound call, according to the bank. There can also be face to face meetings.

Ulster Bank says its sends 11,000 letters a month to distressed mortgage holders.

Irish Independent

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